By SIMONA COVEL

For entrepreneurs trying to start or run a business, the obstacles are huge. But few loom as large as one: health care.

For years, small businesses have griped about the burden of rising health-care costs and warned that the situation was near a crisis point. Well, it’s fair to say that the crisis point is here.

At some businesses, in fact, health care is the highest expense after salaries—with devastating consequences. Owners must skimp on vital investments like marketing and research. Some can’t hire the people they want because top candidates demand premium coverage. Or they end up understaffed because of the high cost of insurance—and lose potential clients as a result.

At the same time, to keep costs in check, countless companies are slashing coverage or dropping it entirely. Some are turning to freelancers or offshore workers instead of hiring full-timers and locals. And some would-be entrepreneurs find insurance so onerous that they’re not even starting a business in the first place.

What’s more, it isn’t just individual companies at risk. It’s the entire economy. Historically, small businesses have boosted recoveries significantly. Since they can’t simply make mass layoffs and hunker down, as so many big companies do, they must take risks to survive—like investing in innovative ideas and hiring more workers to implement them. But stratospheric health-care costs threaten to damp that enthusiasm and choke off investment.

“We have got to figure out how to get an affordable [insurance] package to people who would be entrepreneurs,” says Carl Schramm, president and chief executive of the Ewing Marion Kauffman Foundation, a pro-entrepreneurship organization in Kansas City, Mo. If such a package existed, he adds, “the chances of a more robust recovery at the hands of entrepreneurs would decidedly be higher.”

Mr. Schramm believes that Washington has had few constructive ideas so far, as most of the focus and the funds have been directed to big business, particularly the bailouts of banks and auto makers.

“You don’t have a general chatter right now on the importance of entrepreneurs in government circles,” he says. “There’s a decided emphasis on protecting the framework of big business,” even though small companies historically create the most U.S. jobs.

What Will Congress Do?

It’s not clear what the looming health-care fight in Washington holds for small companies. President Obama has implied that any kind of employer mandate to pay for coverage would exclude small businesses. That’s a relief to many owners—but it still leaves enormous numbers of people without coverage. A recent study from the National Federation of Independent Business, a Washington, D.C., trade group, found that 26 million of the nearly 46 million uninsured Americans are small-business owners, employees or their dependents.

Some members of Congress, mindful that small businesses employ the majority of Americans and lots of their constituents, are pushing for programs that will let small businesses join cooperatives that could use their size to spread risk and negotiate costs down, like bigger businesses. A House-sponsored bill would offer a tax credit to business that join the cooperatives. A similar plan from the Senate also allows companies to band together to spread risk and offers tax credits to help small businesses pay.

Several small-business lobbies support the plans. Though the proposed bills don’t address the biggest problem in the health-care system, the dramatically rising cost of care, the general consensus among a wide swath of lobbying groups and small-business organizations is that they offer a starting point to level the playing field.

Keith Belling, owner of Pop Chips, talks to Kelsey Hubbard about what it takes to become a successful entrepreneur.

No Local Hires

Still, the proposals are just one element in the larger debate about health-care coverage and could morph as lawmakers draw battle lines over contentious issues like a public health-insurance system.

But, for some small businesses, help can’t come soon enough. Consider Nimbus Software of Atlanta. After being battered by the recession, business at the marketing-software company is finally looking up. Nimbus has a six-week backlog of work—too much for the four full-time employees to handle.

But rather than hire more full-time staff, chief executive and co-founder Jason Brewster plans to use developers in the Eastern European nation of Belarus, and maybe additional contractors in the U.S. “If health care wasn’t a line item we needed to worry about, I would probably hire directly,” he says. “I’d have better control” over the staff and their work. But with the company paying about $1,000 per month for the average family plan for each employee, the cost adds up to virtually an extra minimum-wage worker for each full-time staff member.

Mr. Brewster knows how important health insurance is—he has four young children, including one with autism. When the company was founded in 2000, coverage cost about 70% less, he says, and employee co-pays were lower. But now, he says, Nimbus can’t afford to pay for new employees’ health-care coverage—even though the staff is mostly young and fit. On the most recent annual report on his employees’ usage, Mr. Brewster says, not a single one met the deductible.

The problem, he says, is size. Big companies have enough employees to self-insure—their employees are pooled together for purposes of determining risk, and rates in large part are based on workers’ actual health-care use. But Nimbus is too small for that type of plan, so employees’ good health has no impact on rates. Instead, small businesses like Nimbus have little bargaining power and are at the mercy of their insurance company, which assumes the risk. And in recent years, insurers have raised small business rates furiously. Employers have increasingly passed some of those costs on to their staffs.

So, for now, more full-time staff is out of the question—and potential local workers are losing out on jobs. Using offshore workers can be risky, Mr. Brewster acknowledges. Monitoring their work is more difficult, for instance. But the risks are far outweighed by the cost savings, he says.

Tough Choices

Across the country in Oregon, business owner Paul Ward has discovered the many compromises it takes to set up health coverage for a small business. The founder of Web- and multimedia-design company Media Mechanic LLC, based in Tualatin, Ore., outside Portland, is in the process of trying to replace contract workers with three new full-time staffers. He wants local employees who know the market and can help establish the young business. But competition for high-tech workers is fierce, and the best workers demand benefits, Mr. Ward says.

The cheapest plan he found will cost about $400 per employee in premiums, assuming the employees are young and healthy. Covering employees’ spouses and children would run as much as $800 per employee per month—if the company covers 100% of employee premiums and 50% of the spouses’ premiums. That’s simply too much to handle, Mr. Ward says, so he plans not to offer family coverage, and he’ll likely cover only half or two-thirds of his employees’ premiums. That’s a tough pill for Mr. Ward to swallow; in Michigan, where he grew up, workers’ rights reigned supreme, and he believes employers should offer the fullest possible coverage for their staffs.

Even with those concessions, health insurance is likely to come in as the company’s No. 2 expense—second only to wages, and edging out rent and utilities. “It’s less money I can spend on marketing, and less money I can spend on investment in the company,” Mr. Ward says.

M2 Health Care Consulting hasn’t been able to find an affordable plan—and that’s having serious consequences for the health-policy consulting firm. Since the business was created in 2005, its president, Brenda Gleason, has relied on local contract workers—currently, five of them. But her accountant has advised her that it’s time to make those staff members full-time employees, partially for the tax benefits. Ms. Gleason would also prefer the dedication of full-time workers.

The problem? The Washington, D.C., company just can’t afford to cover employees—despite a growth spurt that has left it desperate for additional staff. Only health savings accounts with catastrophic coverage seemed affordable, but they didn’t provide enough coverage to make Ms. Gleason comfortable. Traditional plans with more-comprehensive coverage and lower deductibles came in between $750 and $950 per month per employee, and that’s just not affordable, Ms. Gleason says. (For her part, Ms. Gleason is currently covered by the domestic-policy plan that her partner’s employer offers.)

Since prospective employees increasingly expect coverage, M2 is at a disadvantage. When Ms. Gleason recently offered spots to two candidates, both turned her down, citing at least in part the lack of coverage. It’s a particular problem now, she says, because she’s looking for workers with three to five years of professional experience; often, they’re too old to be on their parents’ plans but too young to have a spouse or partner with coverage.

Meanwhile, the delays in hiring caused M2 to lose business recently. A big potential client took its business elsewhere because M2 didn’t have enough staff to handle the project. “If I can’t hire more people, I can never win that contract,” Ms. Gleason says. “I don’t want to think I’m putting the brakes on the business.”

Abandoning Dreams

In some cases, when a young small business tries to buy insurance, the expenses are enough to stifle it before it gets off the ground. That was the case for Louise Hardaway, who decided to start her own business when her employer, a home-care company focused on bleeding disorders like hemophilia, closed in the spring of last year. She and a former co-worker had a list of clients near their home town of Nashville, Tenn., and thought they’d be able to build a small but stable enterprise. “I really had always wanted to start my own company,” Ms. Hardaway says.

Both Ms. Hardaway and her partner were married to spouses who are self-employed, so they needed to find coverage. Their families had been covered by their previous employer. Ms. Hardaway called an insurance broker. She knew that as a small start-up, her company, Factor 4 Life, would be at a disadvantage, and she expected to pay a couple of thousand dollars a month. After a few days, the broker called with a quote: $12,800 per month to cover five people—Ms. Hardaway and her husband, her business partner, and her partner’s spouse and child. She knew being over 50 might be a liability, and her husband had a bout with kidney stones that may have affected the quote. Nevertheless, they’re in “relatively good health,” she says, with no chronic diseases. The insurer would say only that the quote was based on information Ms. Hardaway provided.

Determined to find coverage, Ms. Hardaway decided to check with several other insurance companies. But because the first company deemed the group to be “max rated”—falling into a high-risk category—the quest was essentially doomed. Insurers share the information, her broker told her, and all of the other quotes would be similar. “You have to cover a lot of healthy lives to make [insurance] profitable,” Ms. Hardaway says. And that’s “an inherent problem” for small businesses.

Ms. Hardaway’s broker suggested health savings accounts, which may offer lower premiums but generally come with a high deductible. But she balked when she saw the fine print: Pre-existing conditions would be covered only for a certain period. She was worried in particular about some polyps that had shown up on a past colonoscopy. If she developed cancer in the future, she was afraid the company could say it was a pre-existing condition.

Factor 4 Life lasted about six months. Last fall—one month before their coverage from their existing employer was set to expire—Ms. Hardaway and her business partner shuttered their nascent business and started working for another company.

The two partners lost thousands of dollars in attorneys’ fees and business filing fees to set up the now-defunct company—not to mention all the time involved. But now they have employer-sponsored health insurance; Ms. Hardaway is paying about $1,000 per month in premiums for herself and her husband. Her new employer “is letting us be self-directed, they know we have a history of success.”

“But it’s not the same” as the dream of being on her own, she says.

–Ms. Covel is a writer in Chicago. She can be reached at reports@wsj.com.

Por MATTHEW COWLEY

SÃO PAULO (Dow Jones)–Los impuestos en Brasil son altos, sus inversiones son demasiado bajas y el progreso para abordar los asuntos profundamente arraigados que subyacen en los obstáculos al crecimiento es “demasiado lento y gradual”, según analistas de la agencia calificadora Standard and Poor’s.

“Vemos algo de progreso en algunas áreas, pero el progreso es muy lento y gradual”, dijo Sebastian Briozzo, director de S&P para deuda de América Latina. Tal gradualidad ha sido el caso de Brasil en los últimos 15 años. Por ahora, “lo positivo y lo negativo en el crédito está balanceado en el actual nivel de calificación”, dijo a Dow Jones Newswires durante una entrevista.

S&P elevó en noviembre la calificación de Brasil a “BBB”, con una perspectiva estable, un reflejo de la mayor capacidad del país para abordar las crisis internacionales. La estabilidad económica de Brasil en la última década ha otorgado al gobierno los medios para responder a las crisis mundiales, y le ha ayudado a apuntalar la economía nacional. Pero los resultados han sido desparejos, lo cual no es sorpresivo dada la magnitud de la turbulencia internacional.

Luego que el crecimiento de Brasil se estancara a fines del año pasado, en medio del agravamiento de la crisis de deuda soberana de Europa, el banco central respondió con una rebaja en las tasas de interés en momentos en que la inflación superaba el límite máximo de su meta y apuntaba a seguir subiendo. La inflación terminó el año en un 6,5%; desde entonces ha retrocedido al 5,2%.

El gobierno de Brasil también tomó medidas para evitar lo que considera como un exceso de apreciación de la moneda brasileña ante monedas importantes como el dólar, y argumenta que la fortaleza limita la competitividad de los exportadores del país y hace que las importaciones sean más baratas.

“Hay una larga lista de razones (…) pero al final terminamos volviendo a asuntos fiscales, y hay un gobierno que invierte demasiado poco. Esta es la principal restricción para crecer a tasas más razonables o más altas en el mediano plazo”, según Briozzo.

El déficit fiscal del gobierno el año pasado fue de cerca del 2,6% del PIB, pero podría caer en torno al 1,8% del PIB este año, ya que el país pagará mucho menos en intereses. Reducir los pagos de intereses es una forma para que el gobierno libere dinero para inversiones, añadió Briozzo.

By ATSUKO FUKASE

When Takashi Hibino took the helm of Japan’s second-largest brokerage firm about a year ago, he knew it would be a tough start, with businesses across the country reeling from the March 11 earthquake and tsunami. Daiwa indeed had a difficult time last year, dented by the euro-zone crisis, the strong yen and overall market turmoil. As a result, the Tokyo securities house has stepped up its cost reduction measures, including 500 job cuts in Asia and Europe.

Daiwa Securities Group

Takashi Hibino

Despite the cutbacks, Daiwa will continue to focus on Asia for its corporate clients and retail investors who hope to tap growth in the region, Mr. Hibino said.

Daiwa, which dissolved a decadelong relationship with Japan’s No. 3 bank, Sumitomo Mitsui Financial Group Inc.

in 2009, is one of the few independent brokerage firms in the world, along with its bigger rival Nomura Holdings Inc.

While speculation continues over whether the Tokyo brokerage can stand alone without any capital alliance with a bank, Mr. Hibino reiterated his firm will retain its independence.

Mr. Hibino, who has worked at the Tokyo broker for 33 years, sat down with Atsuko Fukase to discuss the company’s business plan and challenges amid continued uncertainty in the financial markets. The following interview has been edited.

WSJ: What is your perspective of business environment? How was your first year as chief executive?

Mr. Hibino: We had a difficult year with natural disasters, Europe’s debt crisis and a slump in Tokyo stock market—it was a very unusual year. Besides, the current business environment with tighter regulation makes it difficult for global investment banks to make hefty profits, and the trend will probably continue. The market in Tokyo has been affected by the euro-zone crisis as about 70% of major investors are foreign players, so I learned we can’t change both stricter financial regulation and our market structure that would be hit by other countries’ crises.

So what I’m trying to do is to reduce costs as we can, and to secure a stable income by selling investment trusts. We have reduced costs by 50 billion yen ($626 million) so far and plan to cut another 10 billion yen through system-related expense. We’ve already cut 500 jobs in Asia and Europe so I’m not considering further layoffs.

WSJ: How will the recent cutback in overseas operations affect the company’s global business?

Mr. Hibino: Some people say we should pull out of overseas operations, but that’s definitely not an option. Even before the financial crisis and tighter regulatory and capital constraints, we didn’t have a prospect of making big money in Europe or the U.S., and even in Asia we didn’t have that thought—we’ve always dealt with businesses or services related to Japan even in Asia. Facing a shrinking population and weak domestic demand, companies are seeking growth in Asia. Our customers—retail investors or corporate clients—know that we’ve connected to a global platform so they ask us for global financial products or overseas services.

WSJ: What kind of business do you want to focus on overseas?

Mr. Hibino: We really have to concentrate on selected businesses. M&A advisory is one area. Cross-border deals by Japanese companies will likely continue to increase. We have about 400 M&A bankers across the world, through our London-based boutique house DC Advisory Partners, New York-based Sagent Advisors and our own teams in Tokyo and Hong Kong. On the retail side, we also want to tap huge household assets worth 1,400 trillion yen. Because of the weak stock market, we haven’t seen yet individuals shifting from savings to investments. So asset-management business also will be one of our top priorities.

WSJ: Moody’s Investors Service in November downgraded Daiwa’s senior unsecured debt rating to Baa3 from Baa2—one notch above “junk” grade. How has it affected your business? Are you concerned about a further rating cut?

Mr. Hibino: There’s little chance of a further downgrade, I think. We’ve made efforts of cost cutting through the year and things, like the stock market, seem to be looking up. Moody’s noted that, despite a challenge for earning recovery, we maintained a relatively solid capital base and adequate liquidity. I understand a downgrade could make it difficult to form new contracts or force to put up more collateral in derivatives trades, but we’ve been reducing such derivatives anyway, so I haven’t seen a big impact.

WSJ: What is good about being an independent brokerage firm? Any possibility of forming an alliance?

Mr. Hibino: We’re not considering a capital tie-up like the one that we had with Sumitomo Mitsui Financial Group. It might be true that we had some benefits from the partnership. But now we don’t have to care about whether our business clients are linked to any conglomerate such as Sumitomo, Mitsui or Mitsubishi. We just started new business structure by merging our retail unit and wholesale unit last month so it’s not right to think about other things. But we’re open to think about forming a business partnership globally or domestically as long as it leads to a win-win relationship.

WSJ: Is there any experience in your career that has influenced your management?

Mr. Hibino: I started my career as a bond dealer in 1979 and three years later I was transferred to London when I was 25. Working for five years in the City of London meant a lot—seeing historical turning points like the Plaza Accord, the Big Bang from the center of financial markets was really something. Japan was also the center of attention in the global financial markets being viewed as “rising sun” in the late 1980s. I had hard times also. In 1997, I had to deal with the company’s crisis when a U.S. credit-rating company downgraded Daiwa to nearly noninvestment grade. We really worked hard to deal with it. Because of that experience, I feel we can get over any hurdles.

Por MATTHEW COWLEY

SÃO PAULO (Dow Jones)–Los impuestos en Brasil son altos, sus inversiones son demasiado bajas y el progreso para abordar los asuntos profundamente arraigados que subyacen en los obstáculos al crecimiento es “demasiado lento y gradual”, según analistas de la agencia calificadora Standard and Poor’s.

“Vemos algo de progreso en algunas áreas, pero el progreso es muy lento y gradual”, dijo Sebastian Briozzo, director de S&P para deuda de América Latina. Tal gradualidad ha sido el caso de Brasil en los últimos 15 años. Por ahora, “lo positivo y lo negativo en el crédito está balanceado en el actual nivel de calificación”, dijo a Dow Jones Newswires durante una entrevista.

S&P elevó en noviembre la calificación de Brasil a “BBB”, con una perspectiva estable, un reflejo de la mayor capacidad del país para abordar las crisis internacionales. La estabilidad económica de Brasil en la última década ha otorgado al gobierno los medios para responder a las crisis mundiales, y le ha ayudado a apuntalar la economía nacional. Pero los resultados han sido desparejos, lo cual no es sorpresivo dada la magnitud de la turbulencia internacional.

Luego que el crecimiento de Brasil se estancara a fines del año pasado, en medio del agravamiento de la crisis de deuda soberana de Europa, el banco central respondió con una rebaja en las tasas de interés en momentos en que la inflación superaba el límite máximo de su meta y apuntaba a seguir subiendo. La inflación terminó el año en un 6,5%; desde entonces ha retrocedido al 5,2%.

El gobierno de Brasil también tomó medidas para evitar lo que considera como un exceso de apreciación de la moneda brasileña ante monedas importantes como el dólar, y argumenta que la fortaleza limita la competitividad de los exportadores del país y hace que las importaciones sean más baratas.

“Hay una larga lista de razones (…) pero al final terminamos volviendo a asuntos fiscales, y hay un gobierno que invierte demasiado poco. Esta es la principal restricción para crecer a tasas más razonables o más altas en el mediano plazo”, según Briozzo.

El déficit fiscal del gobierno el año pasado fue de cerca del 2,6% del PIB, pero podría caer en torno al 1,8% del PIB este año, ya que el país pagará mucho menos en intereses. Reducir los pagos de intereses es una forma para que el gobierno libere dinero para inversiones, añadió Briozzo.

By SUMATHI REDDY

A kosher-food manufacturer in Williamsburg, Brooklyn, has reached a $577,000 settlement with 20 of its formers workers, ending a more than four-year battle that cost it numerous big-name customers.

Flaum Appetizing Corp., best known for its hummus, will pay the mostly Mexican immigrants back wages and compensation, resolving National Labor Relations Board litigation and a federal lawsuit filed in Manhattan.

Daniel Gross, executive director of the advocacy group Brandworkers, said the litigation focused on unpaid overtime, and a lack of respect from management.

“They were forced to work 70 to 80 hours a week and were subjected to verbal abuse which was very egregious,” said Mr. Gross, whose group joined the NYC Industrial Workers of the World in a “Focus on the Food Chain” campaign against the business.

Flaum does not admit any wrongdoing in the settlement.

Owner Moishe Grunhut said he was happy to put the litigation behind him.

“My business is here to make the best hummus in town,” he said of his Sunny & Joe’s brand. “The best pickles and the best hummus. So I’d like to concentrate on my business, not on litigation.”

Mr. Grunhut said that despite losing large customers such as Zabars, Fairway and Fresh Direct, his sales increased in 2011 and 2012.

And though business went down initially when Tnuva, a kosher dairy company, dropped Flaum as its distributor last year, it picked up when Flaum found another cheese company to partner with, he said.

Rabbi Ari Hart, a co-founder of Uri L’Tzedek, a New York City-based Orthodox Jewish social-advocacy group, said the group worked to persuade businesses to stop buying Flaum’s products. According to Rabbi Hart, more than 120 businesses stopped selling Flaum’s products at one time or another.

“We’re glad that Flaum’s did the right thing and we encourage customers to support them,” he said. “It’s delicious hummus.”

Mr. Gross said each worker is expected to get between $7,000 and $50,000. None intend to return to Flaum, he said.

In a news release, a former Flaum employee, Maria Corona, said: “More than anything, I want fellow workers in the food factories and warehouses to know that there is real power in coming together and struggling together.”

“We won the respect we deserve and you can too,” she added.

Write to Sumathi Reddy at sumathi.reddy@wsj.com

A version of this article appeared May 8, 2012, on page A16 in some U.S. editions of The Wall Street Journal, with the headline: Hummus Maker Settles Wages Claim.

By KAVITA MOKHA

Ken Maldonado for The Wall Street Journal

Shops along Broadway in Elmhurst, Queens

After decades of remaining under the radar, especially compared with more-coveted Queens neighborhoods like Astoria and Long Island City, the historic neighborhood of Elmhurst is raising its profile—with several developments afoot.

A former Dutch and English settlement, the area is now a melting pot of cultures from Thailand to Colombia, with dozens of languages spoken in its corridors. Immigrant-owned businesses line the heart of the neighborhood along Broadway—many of them opening in the last decade.

Chao Thai, Nusara Thai Kitchen and Lao Bei Fang Dumpling House are among the eateries that have been attracting foodies to Elmhurst from beyond Queens in recent years. There are also mainstays like La Fusta—the oldest Argentine restaurant in New York City.

Ken Maldonado for The Wall Street Journal

Wat Buddha Thai Thavorn Vanaram temple

The neighborhood, among the most diverse in the country, is also home to a number of places of worship including the Wat Buddha Thai Thavorn Vanaram temple, the Jain Center of America and Temple, Chan Meditation Center and St. James Episcopal Church, which dates back to the 1700s.

In the last few years, two new condo developments—the Miramar and C Condo—have added to Elmhurst’s housing stock.

Soon to open is the Elm East—a mixed-use development on Broadway and Queens Boulevard with 83 rental apartments and several retail spaces.

The developer, Pi Capital, says the lease for the retail portion has been signed, bringing in several new franchises to the location including the first Starbucks outpost in Elmhurst.

Across the street from the Elm East, an empty lot owned by Pi Capital Partners, along with a Wendy’s restaurant, will be converted to a shopping mall in the next few years. Local film buffs point out that the Wendy’s to be torn down was the site of the McDowell’s fast-food outlet in the Eddie Murphy classic “Coming to America.”

The changes in Elmhurst aren’t limited to commercial real estate.

The Queens Public Library’s Elmhurst branch, the second busiest in the borough’s network, was closed last year and a new, state-of-the-art facility is being constructed and is expected to open in 2014. The former branch building, which opened in 1906, was built with funding from philanthropist Andrew Carnegie.

Locals say the burgeoning population in the area necessitated such a move.

“The congestion in the neighborhood was evident in the [old] library—it used to be packed,” said Nicholas Dovas, first vice president at the local Newtown Civic Association, who has lived in the area since 1990 and was a volunteer at the library.

The population of Elmhurst and nearby South Corona increased roughly 45% between 1980 and 2010 to 172,598, according to census data.

The growth has led U.S. Rep. Joseph Crowley and City Council member Daniel Dromm to spearhead calls for the reopening of Elmhurst’s Long Island Rail Road station. The station was closed in 1985 in a move that was attributed to low ridership.

Ken Maldonado for The Wall Street Journal

A meal and diners at Lao Bei Fang Dumpling House

The R and M subway lines that currently stop in Elmhurst take between 30 and 40 minutes to reach Manhattan during peak hours—on crowded trains. The LIRR train from Elmhurst would arrive at Manhattan’s Penn Station in roughly 15 minutes.

“If people are given the opportunity to shave off about half an hour from their commute, that’s an enormously valuable product,” said Mr. Crowley, adding that the move would also open up Elmhurst as a neighborhood for additional people to explore.

LIRR officials say they are giving the issue “serious consideration.” Improvements being made on the Port Washington line will add capacity, according to Helena Williams, president of the LIRR. The project would cost between $20 million and $30 million, she said

The next step, Ms. Williams added, will be a ridership study to be conducted in the next year or so, that will analyze the potential market for the LIRR in Elmhurst.

Robert Valdes-Clausell, an Elmhurst resident since 1966 and treasurer of the Newtown Civic Association, said residents are “already being exposed to the rumbling of the [LIRR] train and there is a tremendous increase in population density.”

With the number of residents “expected to grow even further, this is a great opportunity to accommodate and serve the people,” he said.

If You’re Browsing for a Home…

$349,000

40-35 Ithaca St.,

Apt. 6E

Ths is a one-bedroom, one-bathroom condo.

Property Plus: Spacious property at 850 square feet

Property Minus: No parking garage

Listing Agent: Emmy Cai of RE/MAX City Realty, 718-888-9005

$175,000

81-11 45th Ave.,

Apt. 4T

This is a one-bedroom, one-bathroom condo.

Property Plus: Close to the subway

Property Minus: No parking garage

Listing Agent: Joynal Abedin of Realty Executives Today, 646-645-9727

A version of this article appeared May 4, 2012, on page A18 in some U.S. editions of The Wall Street Journal, with the headline: Elmhurst: Home to Many, More Are Coming.

Por LIAM PLEVEM

Fato número 1: Os governos europeus estão entre os maiores detentores de ouro do planeta. Fato número 2: As enormes dívidas contraídas por alguns desses governos estão alimentando uma crise política na Europa e turbulência nos mercados ao redor do mundo.

Esses dois fatos levam a uma pergunta óbvia por parte de muitos investidores: por que esses governos não vendem ouro para pagar suas dívidas?

Seria ótimo se fosse assim tão simples.

Para começar, nem mesmo os europeus possuem tanto ouro assim. As necessidades de empréstimo e subsequentes dívidas de países como Itália, França e Espanha são tão grandes, dizem os analistas, que liquidar suas reservas de ouro não adiantaria muito para equilibrar suas contas no longo prazo.

“Se eles vendessem seu ouro, não sei se isso melhoraria muito sua classificação de crédito”, diz Kenneth Rogoff, professor de economia da Universidade de Harvard que tem estudado as reservas oficiais de ouro.

Também as realidades políticas e do mercado tornariam difícil para os europeus confiar em um milagre dourado, dizem os especialistas. Para começar, há o risco de que tentar vender o ouro ou usá-lo como garantia para empréstimos poderia ser visto no mercado como sinal de desespero — o que poderia elevar os custos dos empréstimos por tornar os credores ainda mais cautelosos, anulando assim o objetivo visado.

Mas alguns investidores ainda precisam ser convencidos de que o ouro não é a cura para todos os males que a Europa está buscando. Afinal, os governos, bancos centrais e instituições financeiras multilaterais como o FMI possuem cerca de 18% do ouro do mundo, segundo o Conselho Mundial do Ouro, uma associação do setor. A Itália possui mais ouro do que qualquer outro país excluindo os Estados Unidos e a Alemanha, diz o Conselho. A França ocupa o 4o. lugar e Portugal, o 12o. Até mesmo a Grécia, a terra do rei Midas, está entre os 30 maiores detentores de ouro, bem à frente de países ricos como a Austrália e potências emergentes como o Brasil, que está na 47a. posição.

E com o preço do ouro perto de bater um recorde em termos nominais — a cotação aumentou 17% só este ano — o valor dessas reservas disparou nos últimos anos. As atuais reservas de ouro da Itália, agora avaliadas em US$ 134 bilhões, teriam alcançado apenas US$ 21 bilhões no final de 2000.

O outro lado da moeda, no entanto, é que o ouro da Itália representa apenas cerca de 6,7% do seu PIB. A reserva de Portugal é proporcionalmente maior, correspondendo a mais de 9% do seu PIB. Mas vender esse ouro mal faria um arranhão na dívida pública de Portugal, que representa 93% do PIB, segundo dados do FMI.

Além disso, membros da União Europeia aceitaram restrições à utilização de suas reservas de ouro quando lançaram a moeda comum. O tratado do euro proíbe os países de financiar operações governamentais através da venda de ouro de posse dos bancos centrais — que é onde a maioria dos países europeus guarda suas reservas — segundo Natalie Dempster, diretora de assuntos governamentais do Conselho Mundial do Ouro .

Usar o ouro para financiar operações governamentais “simplesmente não é uma opção”, diz ela. O ouro, acrescenta Dempster, fica guardado principalmente para proteger o euro.

By MEIR STATMAN

What was I thinking?

If there’s one question that investors have asked themselves over the past year and a half, it’s that one. If only I had acted differently, they say. If only, if only, if only.

Yet here’s the problem: While we know that we made investment mistakes, and vow not to repeat them, most people have only the vaguest sense of what those mistakes were, or, more important, why they made them. Why did we think and feel and behave as we did? Why did we act in a way that today, in hindsight, seems so obviously stupid? Only by understanding the answer to these questions can we begin to improve our financial future.

This is where behavioral finance comes in. Most investors are intelligent people, neither irrational nor insane. But behavioral finance tells us we are also normal, with brains that are often full and emotions that are often overflowing. And that means we are normal smart at times, and normal stupid at others.

The trick, therefore, is to learn to increase our ratio of smart behavior to stupid. And since we cannot (thank goodness) turn ourselves into computer-like people, we need to find tools to help us act smart even when our thinking and feelings tempt us to be stupid.

Let me give you one example. Investors tend to think about each stock we purchase in a vacuum, distinct from other stocks in our portfolio. We are happy to realize “paper” gains in each stock quickly, but procrastinate when it comes to realizing losses. Why? Because while regret over a paper loss stings, we can console ourselves in the hope that, in time, the stock will roar back into a gain. By contrast, all hope would be extinguished if we sold the stock and realized our loss. We would feel the searing pain of regret. So we do pretty much anything to avoid that pain—including holding on to the stock long after we should have sold it. Indeed, I’ve recently encountered an investor who procrastinated in realizing his losses on WorldCom stock until a letter from his broker informed him that the stock was worthless.

Successful professional traders are subject to the same emotions as the rest of us. But they counter it in two ways. First, they know their weakness, placing them on guard against it. Second, they establish “sell disciplines” that force them to realize losses even when they know that the pain of regret is sure to follow.

So in what other ways do our misguided thoughts and feelings get in the way of successful investing—not to mention increasing our stress levels? And what are the lessons we should learn, once we recognize those cognitive and emotional errors? Here are eight of them.

No. 1

Goldman Sachs is faster than you.

There is an old story about two hikers who encounter a tiger. One says: There is no point in running because the tiger is faster than either of us. The other says: It is not about whether the tiger is faster than either of us. It is about whether I’m faster than you. And with that he runs away. The speed of the Goldman Sachses of the world has been boosted most recently by computerized high-frequency trading. Can you really outrun them?

It is normal for us, the individual investors, to frame the market race as a race against the market. We hope to win by buying and selling investments at the right time. That doesn’t seem so hard. But we are much too slow in our race with the Goldman Sachses.

So what does this mean in practical terms? The most obvious lesson is that individual investors should never enter a race against faster runners by trading frequently on every little bit of news (or rumors).

Instead, simply buy and hold a diversified portfolio. Banal? Yes. Obvious? Yes. Typically followed? Sadly, no. Too often cognitive errors and emotions get in our way.

No. 2

The future is not the past, and hindsight is not foresight.

Wasn’t it obvious in 2007 that financial institutions and financial markets were about to collapse? Well, it was not obvious to me, and it was probably not obvious to you, either. Hindsight error leads us to think that we could have seen in foresight what we see only in hindsight. And it makes us overconfident in our certainty about what’s going to happen.

Want to check the quality of your foresight? Write down in permanent ink your forecast of tomorrow’s stock prices. Do that each day for a year and check the accuracy of your predictions. You are likely to find that your foresight is not nearly as good as your hindsight.

Some prognosticators say that we are now in a new bull market and others say that this is only a bull bounce in a bear market. We will know in hindsight which prognostication was right, but we don’t know it in foresight.

When I hear in my mind’s ear a voice that says that the stock market is sure to zoom or plunge, I activate my “noise-canceling” device rather than go online and trade. You might wish to install this device in your mind as well.

No. 3

Take the pain of regret today and feel the joy of pride tomorrow.

Emotions are useful, even when they sting. The pain of regret over stupid comments teaches presidents and the rest of us to calibrate our words more carefully. But sometimes emotions mislead us into stupid behavior. We feel the pain of regret when we find, in hindsight, that our portfolios would have been overflowing if only we had sold all the stocks in 2007. The pain of regret is especially searing when we bear responsibility for the decision not to sell our stocks in 2007. We are tempted to alleviate our pain by shifting responsibility to our financial advisers. “I am not stupid,” we say. “My financial adviser is stupid.” Financial advisers are sorely tempted to reciprocate, as the adviser in the cartoon who says: “If we’re being honest, it was your decision to follow my recommendation that cost you money.”

In truth, responsibility belongs to bad luck. Follow your mother’s good advice, “Don’t cry over spilled milk.”

Where am I leading you? Stop focusing on blame and regret and yesterday and start thinking about today and tomorrow. Don’t let regret lead you to hold on to stocks you should be selling. Instead, consider getting rid of your 2007 losing stocks and using the money immediately to buy similar stocks. You’ll feel the pain of regret today. But you’ll feel the joy of pride next April when the realized losses turn into tax deductions.

No. 4

Investment success stories

are as misleading as

lottery success stories.

Have you ever seen a lottery commercial showing a man muttering “lost again” as he tears his ticket in disgust? Of course not. What you see instead are smiling winners holding giant checks.

Lottery promoters tilt the scales by making the handful of winners available to our memory while obscuring the many millions of losers. Then, once we have settled on a belief, such as “I’m going to win the lottery,” we tend to look for evidence that confirms our belief rather than evidence that might refute it. So we figure our favorite lottery number is due for a win because it has not won in years. Or we try to divine—through dreams, horoscopes, fortune cookies—the next winning numbers. But we neglect to note evidence that hardly anybody ever wins the lottery, and that lottery numbers can go for decades without winning. This is the work of the “confirmation” error.

What is true for lottery tickets is true for investments as well. Investment companies tilt the scales by touting how well they have done over a pre-selected period. Then, confirmation error misleads us into focusing on investments that have done well in 2008.

Lottery players who overcome the confirmation error conclude that winning lottery numbers are random. Investors who overcome the confirmation error conclude that winning investments are almost as random. Don’t chase last year’s investment winners. Your ability to predict next year’s investment winner is no better than your ability to predict next week’s lottery winner. A diversified portfolio of many investments might make you a loser during a year or even a decade, but a concentrated portfolio of few investments might ruin you forever.

No. 5

Neither fear nor exuberance are good investment guides.

A Gallup Poll asked: “Do you think that now is a good time to invest in the financial markets?” February 2000 was a time of exuberance, and 78% of investors agreed that “now is a good time to invest.” It turned out to be a bad time to invest. March 2003 was a time of fear, and only 41% agreed that “now is a good time to invest.” It turned out to be a good time to invest. I would guess that few investors thought that March 2009, another time of great fear, was a good time to invest. So far, so wrong. It is good to learn the lesson of fear and exuberance, and use reason to resist their pull.

No. 6

Wealth makes us happy, but wealth increases make us even happier.

John found out today that his wealth fell from $5 million to $3 million. Jane found out that her wealth increased from $1 million to $2 million. John has more wealth than Jane, but Jane is likely to be happier. This simple insight underlies Prospect Theory, developed by Daniel Kahneman and Amos Tversky. Happiness from wealth comes from gains of wealth more than it comes from levels of wealth. While gains of wealth bring happiness, losses of wealth bring misery. This is misery we feel today, whether our wealth declined from $5 million to $3 million or from $50,000 to $30,000.

We’ll have to wait a while before we recoup our recent investment losses, but we can recoup our loss of happiness much faster, simply by framing things differently. John thinks he’s a loser now that he has only $3 million of his original $5 million. But John is likely a winner if he compares his $3 million to the mountain of debt he had when he left college. And he is a winner if he compares himself to his poor neighbor, the one with only $2 million.

In other words, it’s all relative, and it doesn’t hurt to keep that in mind, for the sake of your mental well-being. Standing next to people who have lost more than you and counting your blessings would not add a penny to your portfolio, but it would remind you that you are not a loser.

No. 7

I’ve only lost my children’s inheritance.

Another lesson here in happiness. Mental accounting—the adding and subtracting you do in your head about your gains and losses—is a cognitive operation that regularly misleads us. But you can also use your mental accounting in a way that steers you right.

Say your portfolio is down 30% from its 2007 high, even after the recent stock-market bounce. You feel like a loser. But money is worth nothing when it is not attached to a goal, whether buying a new TV, funding retirement, or leaving an inheritance to your children or favorite charity.

A stock-market crash is akin to an automobile crash. We check ourselves. Is anyone bleeding? Can we drive the car to a garage, or do we need a tow truck? We must check ourselves after a market crash as well. Suppose that you divide your portfolio into mental accounts: one for your retirement income, one for college education of your grandchildren, and one for bequests to your children. Now you can see that the terrible market has wrecked your bequest mental account and dented your education mental account, but left your retirement mental account without a scratch. You still have all the money you need for food and shelter, and you even have the money for a trip around the country in a new RV. You might want to affix to it a new version of the old bumper sticker: “I’ve only lost my children’s inheritance.”

So here’s my advice: Ask yourself whether the market damaged your retirement prospects or only deflated your ego. If the market has damaged your retirement prospects, then you’ll have to save more, spend less or retire later. But don’t worry about your ego. In time it will inflate to its former size.

No. 8

Dollar-cost averaging is not rational, but it is pretty smart.

Suppose that you were wise or lucky enough to sell all your stocks at the top of the market in October 2007. Now what? Today it seems so clear that you should not have missed the opportunity to get back into the market in mid-March, but you missed that opportunity. Hindsight messes with your mind and regret adds its sting. Perhaps you should get back in. But what if the market falls below its March lows as soon as you get back in? Won’t the sting of regret be even more painful?

Dollar-cost averaging is a good way to reduce regret—and make your head clearer for smart investing. Say you have $100,000 that you want to put back into stocks. Divide it into 10 pieces of $10,000 each and invest each on the first Monday of each of the next 10 months. You’ll minimize regret. If the stock market declined as soon as you have invested the first $10,000 you’ll take comfort in the $90,000 you have not invested yet. If the market increases you’ll take comfort in the $10,000 you have invested. Moreover, the strict “first Monday” rule removes responsibility, mitigating further the pain of regret. You did not make the decision to invest $10,000 in the sixth month, just before the big crash. You only followed a rule. The money is lost, but your mind is almost intact.

Things could be a lot worse.

–Mr. Statman is a professor of finance at Santa Clara University in Santa Clara, Calif. He can be reached at reports@wsj.com.